But by the time that bell sounded again on the New York Stock Exchange, seven and a half frantic hours later, $1.2 trillion had vanished from the United States stock market.

What had started 24 hours earlier, with a modest sell-off in stock markets in Asia, had turned into Wall Street’s blackest day since the 1987 crash. The broad market, as measured by the Standard & Poor’s 500-stock index, plunged almost 9 percent, its third-biggest decline since World War II. The Dow Jones industrial average fell nearly 778 points, or 6.98 percent, to 10,365.45.

Across Wall Street, no one could quite believe what was happening on the floor — the floor of the House of Representatives, not the New York Exchange...

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David Brooks / New York Times:

Revolt of the Nihilists — In 1933, Franklin Roosevelt inherited an economic crisis. He understood that his first job was to restore confidence, to give people a sense that somebody was in charge, that something was going to be done. — This generation of political leaders is confronting …

With Deal's Collapse, the McCain Camp Attacks — WEST DES MOINES, Iowa — Besides stockholders whose portfolios were ravaged Monday afternoon, the one person with the most riding on the bailout bill that collapsed in Congress may have been Senator John McCain.

In Bailout Vote, a Leadership Breakdown — WASHINGTON — The collapse of the proposed rescue plan for the teetering financial system was the product of a larger failure — of political leadership in Washington — at a moment when the world was looking to the United States to contain the cascading economic crisis.

John Hussman / Hussman Funds:You Must Be Able To Read a Balance Sheet - the government is taking on financially non-viable securities and warrants on common equity, while failing to improve the capital position of these financial companies at all (unless it overpays).

Taxpayers will not make money here. As Congressman Scott Garrett noted to taxpayers on Sunday, "This morning we should be very much alarmed. Obviously, Washington is not listening to your wishes. Those who used to work for Goldman Sachs will support this deal. Those who have blocked reform in the past will support this deal. I will not support this deal." I couldn't agree more. This is not a good deal, because it will waste taxpayer money without addressing the fundamental solvency problems...

Discussion:Paul Krugman:People I agree with, part one [laying out the balance sheet issues] -- [John Hussman] explains why the Paulson plan as originally sold didn’t provide any real answer to the problem...

comment: So how can the United States be a Banana Republic if the Congress votes to not do something dumb?

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Paul Krugman:

OK, we are a banana republic — House votes no. Rex Nutting has the best line: House to Wall Street: Drop Dead. He also correctly places the blame and/or credit with House Republicans. For reasons I've already explained, I don't think the Dem leadership was in a position to craft a bill …

The Beltway Crash — Congress lives up to its 10% approval rating. — America has survived a feckless political class in the past, and it will again after this week. But Monday's crash and burn of the Paulson plan on Capitol Hill reveals a Washington elite that has earned every bit of the disdain that Americans have for it...

An Appeal and a Blame Game — Nominees Link Each Other to Crisis, Urge Action on Hill — Reacting to the House's defeat of a $700 billion economic rescue proposal Monday, Sens. Barack Obama and John McCain called on Congress to pass a new bill and then sought to blame each other for the deadlock on Capitol Hill...

The S&P/Case-Shiller home-price index dropped 16.3 percent from a year earlier, more than forecast, after a 15.9 percent decline in June. The gauge has fallen every month since January 2007, and year-over-year records began in 2001....

THAT MEAN, NASTY NANCY PELOSI — Here's the Pelosi floor speech that Republicans claim so enraged them that they decided to change their votes on the bailout: — And here is the Republican House leadership laying all the blame at Pelosi's feet:

Bailout questions answered — I'm being asked two big questions about this thing: (1) Was it really necessary? (2) Shouldn't Dems have tossed the whole Paulson approach out the window and done something completely different? — On (1), the answer is yes.

Hello from New York where I’m officially starting to get flat-out hostile towards both parties working in Washington DC. I understand the kabuki theater nature of politics. I both forgive and have a grudging appreciation for a well-turned political barb. But when demonstrably clueless folks come into my house and start bringing “daughters” into the argument for doing nothing while financial markets seize; I get a little revved up. “Wall St. vs. Main St.” is a lie. Pitting Wall against Main is akin to starting a blood feud between your right leg and left leg; neither side can actually win and just engaging in the fight guarantees winding up on your ass...

The Government has decided to put in place with immediate effect a guarantee arrangement to safeguard all deposits (retail, commercial, institutional and interbank), covered bonds, senior debt and dated subordinated debt (lower tier II), with the following banks: Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society and such specific subsidiaries as may be approved by Government following consultation with the Central Bank and the Financial Regulator. It has done so following advice from the Governor of the Central Bank and the Financial Regulator about the impact of the recent international market turmoil on the Irish Banking system. The guarantee is being provided at a charge to the institutions concerned and will be subject to specific terms and conditions so that the taxpayers’ interest can be protected. The guarantee will cover all existing aforementioned facilities with these institutions and any new such facilities issued from midnight on 29 September 2008, and will expire at midnight on 28 September 2010...